Azion Manufacturing is a company that produces two types of cleaning detergents, Sunny Clear and Rosy Nice. Previously, Azion Manufacturing used single rate/ traditional costing system in computing its product overhead costs. Mr. Yeong, the newly appointed Chief Finance Manager decides to implement the Activity- Based Costing (ABC) system starting this year in computing the product costs. Below is the information gathered relates to the cost production of 40,000 units of Sunny Clear Detergent and 50,000 units of Rosy Nice Detergent:

	Sunny Clear	Rosy Nice
Direct material cost	RM15 per unit	RM10 per unit
Direct labour hour	1 hour per unit	1 hour per unit
Wages rate	RM10 per hour	RM10 per hour

Mr. Yeong suggests the following cost pools to compute the overhead costs using the Activity-Based Costing (ABC) system as stated below:

Activity Cost Pools	Cost Drivers	Estimated Overhead (RM)	Expected Usage
			Sunny Clear	Rosy Nice
Machine setups	No. of setups	300,000	1,000	2,000
Mixtures	No. of mixtures	180,000	600	900
Inspections	No. of inspections	240,000	10,000	15,000

Instructions

(a) If the estimated total overhead costs are computed based on total direct labour hours, compute the overhead costs for both products using the single rate / traditional costing system. (4 marks)

(b) Based on answers in (a), compute the unit cost for each product using the single rate / traditional costing system. (2 marks)

(c) Compute the activity rate for each activity cost pool. (4.5 marks)

(d) Determine the unit cost for each product according to the ABC system. (8 marks)

(e) Comparing the answers in (b) and (d), which system is more appropriate to determine the overhead cost for both products. Explain.